Early on, Brooklynites were calling Amy Cunningham, owner of Fitting Tribute Funeral Services, to ask about prices. Soon, they were only asking whether she would handle their case. Desperate to find help, some Brooklynites called John Quevedo, a funeral director in Yonkers, in the city’s northern suburbs. As he talked to them, he often wondered how many funeral homes had turned them down, forcing them to look outside the city. Given that there are 256 funeral homes in New York City, there must have been a lot of fruitless phone calls.
The shortage of funeral directors wasn’t surprising. The number of deaths in New York City during the COVID-19 spike was six times higher than normal. What’s more, the spike increased the cost of providing direct cremations. Funeral directors tell harrowing stories of retrieving COVID-19 victims’ bodies from cluttered apartments and disorganized hospital trailers. Soon, funeral directors were turning to outside help, paying twice the normal rate to have “trade guys” pick up bodies. Everyone was dealing with dwindling supplies of PPEs. And once they had the bodies, they still had to figure out how to get them cremated. Queues at local crematories forced them to either travel to available retorts far away or store corpses in refrigerators (or air-conditioned chapels) for longer than normal.
A new price equilibrium? / As an economist, I asked Cunningham whether she had increased her prices to respond to the surge. She said she hadn’t and knew of no one who had. Nor had she heard of anyone “upselling” grieving families into buying more expensive options that provide larger margins. I asked her why she hadn’t raised prices and she said she wasn’t sure she could do so legally. She quickly added that she hadn’t given the issue much thought because she was too busy waiting in line at the medical examiner’s offices, retrieving bodies, driving to crematories, and answering phone calls.
I looked into whether funeral directors could legally raise their prices. A lawyer who represents companies in the industry told me they could do so if they updated their “General Price List” (GPL), required by the Federal Trade Commission. They would have to honor the earlier prices for anyone who mentioned seeing or hearing them, but for new customers they could charge higher prices.
Though the FTC wouldn’t pose a problem for funeral directors, New York City’s Department of Consumer and Worker Protection might. On March 16, the agency made “price gouging illegal for any personal or household good or any service that is needed to prevent or limit the spread of or treat the new coronavirus (COVID-19).” It takes some parsing, but this stricture seems to apply to funeral services because the licensing laws are often justified as protecting the public health by ensuring that only trained individuals handle bodies containing infectious disease. I emailed the department’s press secretary to ask how many price-gouging complaints had been filed against funeral homes during the crisis. She replied that seven had been received and her agency was investigating.
If New York’s anti-price-gouging law does apply to funeral homes, it would give them some leeway: it does permit increases of 10%. The typical Brooklyn funeral home charges $1,878 for a direct cremation, according to Funeralocity.com. An extra $187.80 would barely cover the increased cost of retrieving bodies and would fall far short of what some funeral homes have been paying for refrigeration and travel to faraway crematories.
It might seem sensible to impose a price ceiling in the Brooklyn cremation market. Supply is highly inelastic (as is demand, usually), so without an intervention prices would soar without doing much to alleviate the shortage. Even with sky-high prices, would-be funeral directors can’t quickly enter the stringently regulated funeral trade. And few families will choose an option other than cremation even as prices rise. Thus, it seems natural to suppose that higher prices wouldn’t change the supply of cremations but would only affect how much families pay and funeral directors receive.
But elasticities are not written in stone. With the stroke of his pen, New York Gov. Andrew Cuomo increased the elasticity of supply by signing an executive order allowing out-of-state funeral directors to assist New York funeral directors. He could have done more: notice the use of the word “assist” instead of “replace.” The limited effort likely was necessary to win the support of the New York Funeral Directors Association—and that’s why I’m skeptical the order would have done much to alleviate the shortage at the height of the surge.
Barriers to entry / New York’s funeral regulations—and those of many other U.S. states—create barriers to entry that are worsening shortages in the COVID-19 crisis. For instance, only funeral directors licensed by the State of New York can legally remove bodies from hospital morgues and medical examiners’ offices. Thus, Brooklynites can get help from a funeral director like Quevedo in Yonkers, but not from a funeral director right across the bay in New Jersey.
Across the country, funeral regulations can be reformed in ways that make the supply of cremation services more elastic without eroding public safety. A good start would be to eliminate laws that reflect the needs of bygone eras. In recent years, most bodies have been cremated: for example, in 2012 in Florida, 63% of bodies were cremated, 33% were buried, 3% were entombed, and roughly 0.7% were donated to medical schools. The rate of embalming has fallen along with the burial rate; COVID-19 will accelerate the descent. Despite this market shift, funeral directors in New York and many other states are required to know how to embalm a body and funeral homes must have an embalming preparation room. These laws have ensured the funeral industry has excess capacity—but of the wrong type to handle the current pandemic.
Brooklynites can also thank regulations for the long queues at local crematories. New York requires that crematories be in nonprofit cemeteries. Similar-sized states without this restriction have far more crematories: compare New York’s 49 to Florida’s 206 and Texas’ 186, based on 2019 data from the Cremation Association of North American.
You’ve got to do something with dead bodies. Today, the only important substitute to cremation is burial. When Cunningham couldn’t handle any more cremation cases, she started advising callers to think about simple burials. They’re more expensive, but they can be done quickly. Together with the option of Hart Island, simple burials are what give the demand for cremations its elasticity.
Reform / Some funeral directors say they want to charge lower prices to families that would struggle to pay the list price or have lost multiple members to COVID-19. But offering such discounts would violate the FTC’s one-price-fits-all Funeral Rule. The FTC should relax this prohibition during the pandemic.
The Funeral Rule is currently up for review and the FTC is accepting comments. Here’s my recommendation: First, the law should be defanged a bit, so that funeral directors are comfortable raising prices in response to unanticipated shocks. That said, the FTC should continue to require death-care firms to provide price information. I would mandate that General Price Lists be posted on funeral home websites and extend that requirement to cemeteries. Without the Funeral Rule, consumers could not be assured of easy access to prices over the phone or on consumer websites like Funeralocity.com and Parting.com. Without transparency, funeral homes might have less pressure to keep prices competitive.
Like ventilators, markets might underprovide mortuary refrigerators and cremation retorts during pandemics. What Brooklyn funeral home would want to invest in refrigeration capacity just in case the pandemic drags on? What Middle-America crematory would want to invest in retorts in case its city becomes the next epicenter of the disease? But many consumers would benefit from such investment if faced with the loss of a relative during this pandemic. Instead of encouraging the acquisition of refrigeration capacity or the creation of crematories, public policies are discouraging them by making funeral providers reluctant to pass on their costs to consumers.
Conclusion / During the spring wave of COVID-19 deaths, Brooklynites faced shortages of funeral directors, mortuary refrigerators, and cremation retorts. But if Cunningham’s experience is broadly correct that funeral directors did not increase their prices, how was the disequilibrium in supply and demand handled?
Another funeral director was quoted as saying that he no longer accepted cremation cases unless they were requests from families he had served before. I don’t know about you, but I’m thinking about buying an expensive cremation urn at what looks like a well-equipped funeral home—but I’d rather leave my fate to a less regulated market.
